Missed Final Quiz Flashcards
Land plus new construction cost minus depreciation is the formula for the ________.
A. Cost approach
B. Market data approach
C. Income approach
D. Capitalization approach
Rationale: The correct answer is A. The cost approach in appraisal is always used for special purpose properties. A special purpose property does not produce income and there are no comps available.
The right to redeem the property after a tax foreclosure sale is called: A. Equitable redemption B. Buyer redemption C. Statutory redemption D. This is never used in Texas.
Rationale: The correct answer is C. Statutory redemption is used after a tax sale. Equitable redemption is used with a foreclosure for mortgage. The owner of the property must pay all of the late payments and penalties on the property before the foreclosure to stop the foreclosure for mortgage.
The owners of a cooperative estate hold shares of stock in the cooperative and are issued a: A. Proprietary lease B. Gross lease C. Seller's list D. Buyer's list
Rationale: The correct answer is A. The proprietary lease spells out the rights and privileges the buyer has to a particular unit on the property. A gross lease is a typical apartment lease.
Master plans for an area, subdivision regulations, building codes, environmental protection legislation and zoning are all examples of: A. Public controls B. Private controls C. Office controls D. City controls
Rationale: The correct answer is A. Condominium bylaws, restrictive covenants, and deed restrictions are all private controls on property.
Written documents affecting title to real estate are recorded:
A. Where the titleholder resides
B. Where the titleholder has legal residence
C. At the county clerk’s office where the property is located
D. At any county clerk’s office in Texas
Rationale: The correct answer is C. Each county in Texas has a county clerk’s office and all documents pertaining to property in that county are recorded in that office.
The premiums for the title insurance policy are set by the: A. Title Company B. Texas Department of Insurance C. State Department of Premiums D. Texas Real Estate Commission
Rationale: The correct answer is B. The premiums are set by the Texas Department of Insurance and are the same at all title companies in the state of Texas. The amount paid for the insurance policy is based on the sales price of the house.
Jack has a lien on his home. The lien will be repaid in full by the maturity date without the need for a balloon payment. This type of loan is known as a(n): A. Term loan B. Straight loan C. Amortized loan D. Loan point
Rationale: The correct answer is C. With an amortized loan, the borrower pays part of the principal and part of the interest every month. By the end of the loan all of the principal and interest has been paid.
Private Mortgage Insurance was formed as a privately-owned business venture to insure home mortgage loans. It insures: A. Only the top 20% of the sales price B. 100% of the sales price C. 100% of the loan amount D. Only the top 20% to 25% of a loan
Rationale: The correct answer is D. Private mortgage insurance covers a lender’s risk if the lender extends a loan for more than 80 percent of the fair market value (or purchase price, whichever is less) of property. Usually, the borrower pays the premiums for the PMI insurance.
When using the market approach to appraise residential property the price on the ______________ will be adjusted up or down.
A. Comps
B. Subject property
C. Both the comps and the subject property
D. The market approach is not used to appraise residential property.
Rationale: The correct answer is A. The comp prices are used to find the value of the subject property. The value of the comps is adjusted to make them more like the subject property.
The due-on-sale clause is another name for the: A. Bill of sale B. Alienation clause C. Acceleration clause D. Foreclosure clause
Rationale: The correct answer is B. An acceleration clause is used in a foreclosure on the property. An alienation clause is also called a due on sale clause.
The \_\_\_\_\_\_\_\_\_\_\_\_\_ pays expenses and receives income for the day of closing. A. Seller B. Buyer C. Seller and Buyer D. Title company
Rationale: The correct answer is A. In Texas the seller is responsible for the day of closing on the property. The seller pays the taxes, maintenance fees, and HOA dues for the day of closing.
A VA loan requires:
A. No down payment
B. A down payment of 35% of the sales price
C. A down payment of 3.5% of the sales price
D. A down payment equal to 20% of the sales price
Rationale: The correct answer is A. VA is the Veterans Administration and they guarantee loans for lenders.
Redlining is the lender refusing to make loans on properties in certain: A. Areas B. Neighborhoods C. Locations D. All of the above
Rationale: The correct answer is D. The lender must loan money based on the qualifications of the borrower and not on where the property is located.
